EXHIBIT 10.2












                          MASTER DISTRIBUTOR AGREEMENT



                                     BETWEEN



                        REDHOOK ALE BREWERY, INCORPORATED


                                       AND


                          ANHEUSER-BUSCH, INCORPORATED





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                          MASTER DISTRIBUTOR AGREEMENT


         THIS MASTER DISTRIBUTOR  AGREEMENT (the "Agreement") is made as of July
1, 2004 by and between  REDHOOK ALE BREWERY,  INCORPORATED  having its principal
place of business at 14300 NE 145th Street, Suite 210,  Woodinville,  Washington
98072-9045  ("Redhook") and  ANHEUSER-BUSCH,  INCORPORATED  having its principal
place of business at One Busch Place,  St. Louis,  MO 63118  (referred to herein
interchangeably as "Master Distributor" or "ABI").

         WHEREAS,  Redhook brews and markets products in the United States, with
the  exception  of eleven  states  in which  its  products  are  marketed  by an
affiliate, Craft Brands Alliance LLC.

         WHEREAS, ABI and Redhook desire to have ABI serve as Master Distributor
of the Products  and to  coordinate  the delivery of the Products to  designated
wholesalers in the ABI wholesaler network; and

         WHEREAS,  ABI and Redhook  desire  Redhook to have  responsibility  for
developing and implementing programs that create demand for, market, promote and
advertise the Products in the Territory (as defined herein);

         NOW THEREFORE,  in consideration of the mutual covenants and agreements
hereinafter set forth, Redhook and ABI agree as follows:

                                    ARTICLE I
                                   DEFINITIONS
         For purposes of this Agreement, capitalized terms not otherwise defined
herein shall have the following meanings ascribed thereto:

         "ABI  COMPETITOR"  shall  mean  any  Person  that,  together  with  the
Affiliates of such Person,  has annual alcohol beverage sales of $100,000,000 or
more in North  America  (such number to be adjusted  annually in  proportion  to
changes in the Consumer Price Index from the date hereof).

<PAGE>

         "ABI  DISTRIBUTION   FACILITY"  shall  mean  the  ABI  source  brewery,
warehouse,  WSC,  third-party  warehouse or other suitable  location  reasonably
designated by ABI from which ABI will ship Product to Alliance Wholesalers.

         "ADDITIONAL  PRICE COMPONENT" shall mean 90% of the difference  between
the price actually charged to an Alliance  Wholesaler by ABI for a Product,  and
the Fully Loaded Cost for such Product.

         "AFFILIATE"  shall mean,  with  respect to any Person,  (i) each Person
that, directly or indirectly,  owns or controls,  whether beneficially,  or as a
trustee,  guardian  or other  fiduciary,  50% or more of the  equity  securities
having  ordinary  voting power in the  election of directors of such Person,  or
(ii) each Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person.

         "AFFILIATED  WHOLESALER"  shall  mean  any  wholesaler  of the  alcohol
beverage  products of ABI that  distributes  the  Products in any portion of the
Territory  pursuant  to  a  distribution  agreement  between  Redhook  and  such
wholesaler.

         "ALLIANCE  WHOLESALERS"  shall mean those malt beverage  wholesalers of
ABI, including without limitation,  ABI branches,  which have agreed to purchase
the Products from ABI and to distribute the Products in the Territory.

         "BARREL" shall be equal to 31 United States gallons.

         "COMMENCEMENT DATE" shall mean July 1, 2004.

         "CONFIDENTIAL  INFORMATION"  shall have the  meaning  assigned to it in
Section 18.01(a).

         "COOPERAGE  HANDLING  CHARGE"  shall mean * per  Pallet  Lift for draft
Product during 2004; ATTACHMENT A attached hereto describes the methodology used
to modify Cooperage Handling Charge for 2005 and future years.

         "FORCE MAJEURE" shall have the meaning assigned to it in Section 16.01.

         "FULLY LOADED COST" shall mean for a Product, the sum of:

* CONFIDENTIAL TREATMENT REQUESTED

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                  (a) the Scheduled Price for such Product; plus

                  (b) the Margin.

         "INCOMPATIBLE CONDUCT" shall mean any act or omission of Redhook or its
Affiliates that, in the sole determination of ABI, damages either the reputation
or image of ABI or of the brewing  industry.  ATTACHMENT B attached  hereto sets
forth  examples  of the nature and  gravity of acts and  omissions  constituting
Incompatible Conduct and not constituting  Incompatible  Conduct;  such examples
shall not limit the  nature of acts  that  could be  construed  as  Incompatible
Conduct.

         "INCREMENTAL  MARGIN" shall mean during 2004, * per case-equivalent (of
288 fluid  ounces per case) for packaged or draft  Product.  For 2005 and future
years,  the applicable  amount described above in this definition shall increase
or decrease for each  calendar  year  pursuant to the  methodology  set forth in
ATTACHMENT C attached hereto.

         "INITIAL  TERM" shall have the meaning  assigned to it in Section  7.01
hereof.

         "INTELLECTUAL  PROPERTY"  shall  have  the  meaning  assigned  to it in
Section 6.01.

         "INVENTORY  MANAGER"  shall have the meaning  assigned to it in Section
11.10.

         "INVENTORY MANAGER FEE" shall mean the Inventory  Manager's annual cash
compensation.

         "INVOICING COSTS" shall mean * per Pallet Lift for Product during 2004.
For 2005  and  future  years,  the  applicable  amount  described  above in this
definition  shall  increase or decrease for each  calendar  year pursuant to the
methodology set forth in ATTACHMENT C attached hereto.

         "MARGIN"  shall mean  during 2004 * per  case-equivalent  (of 288 fluid
ounces per case) for packaged or draft Product.

         For 2005 and future years,  the applicable  amount  described  above in
this  definition  shall  increase or decrease for each calendar year pursuant to
the methodology set forth in ATTACHMENT C attached hereto.

* CONFIDENTIAL TREATMENT REQUESTED


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         "MASTER  DISTRIBUTOR"  shall mean ABI in its capacity as a  distributor
under this Distribution Agreement.

         "MODIFIED PRODUCT" shall have the meaning set forth in Section 11.08 of
this Agreement.

         "NEW PRODUCT"  shall mean new malt  beverage(s)  that Redhook wishes to
add, through  development or acquisition,  to its beverage product line existing
as of the Commencement Date.

         "NON-ALLIANCE  WHOLESALERS"  shall mean those beer wholesalers to which
Redhook has granted  distribution rights for any of the Product in the Territory
as of the date of this  Agreement  and  which  are  listed  as  "WHOLESALER"  on
ATTACHMENT  D attached  hereto,  as the same may be  modified  from time to time
pursuant to the terms and  conditions of this  Agreement,  but shall not include
Affiliated Wholesalers.

         "OFFER  EXPIRATION  DATE"  shall  have the  meaning  assigned  to it in
Section 11.04(a).

         "OFFER  NOTICE"  shall  have  the  meaning  assigned  to it in  Section
11.04(a).

         "PALLET  LIFT"  shall  mean a pallet of draft or  packaged  Product  or
cooperage  that, in each case, is prepared in such a manner that ABI may deliver
or move such Pallet in accordance with its customary practices in one operation.

         "PERSON" shall mean any individual,  sole proprietorship,  partnership,
joint venture, trust,  unincorporated  organization,  association,  corporation,
institution,  public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise,  including, without limitation, any
instrumentality, division, agency, body or department thereof).

         "PRODUCTS" shall mean all malt beverage products marketed by Redhook as
of the Commencement  Date and any malt beverage products for which ABI agrees to
act as master distributor pursuant to Section 11.03 hereof but shall not include
any malt beverage  products the marketing of which Redhook  discontinues  or the
distribution of which is terminated pursuant to this Agreement.

         "PURCHASE  PRICE" shall have the meaning assigned to it in Section 4.01
hereof.


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         "RECORDS" shall have the meaning assigned in Article XVII (a).

         "SCHEDULED PRICE" shall mean the purchase price for Product.

         "STAGING COSTS" shall mean * per Pallet Lift for packaged Product,  and
* per Pallet Lift for draught Product,  during 2004.  ATTACHMENT A describes the
methodology  used to  modify  Staging  Costs for 2005 and  future  years and the
assumptions and activities involved in Staging Costs.

         "TAXES" shall mean all applicable  national,  federal,  state and local
excise and other  brewing  related  taxes and any  applicable  duties and import
tariffs and fees (including  without  limitation  liquor and consumption  taxes)
paid or incurred by ABI in connection with this Agreement.

         "TERM" shall have the meaning assigned to it in Section 7.01 hereof.

         "TERRITORY"  shall mean all states and territories in the United States
of America other than Alaska,  Arizona,  California,  Colorado,  Hawaii,  Idaho,
Montana,  New  Mexico,  Nevada,  Oregon  and  Wyoming,  and  shall  exclude  any
jurisdiction  subsequently excluded from the scope of this Agreement pursuant to
Section 11.11 hereof.

         "WHOLESALER  SUPPORT  CENTER  COSTS" or "WSC COSTS" with respect to any
Product  shipped  by  Redhook  to a WSC  shall  mean  the fee paid by ABI to the
operator of the WSC for its services with respect to such Product.

         "WIDMER" shall mean Widmer Brothers Brewing Company.

         "WSC"  shall  mean  the   regional   wholesaler   support   centers  or
distribution  centers  established by ABI for the receipt of products designated
by ABI and the  palletizing  and preparation for pick up of such products by the
adjoining wholesalers.

                                   ARTICLE II
                          GRANT OF DISTRIBUTION RIGHTS


         Redhook  hereby  grants to ABI and ABI hereby  accepts from Redhook the
exclusive right to serve as the master distributor to distribute the Products in
the Territory commencing on the Commencement Date, except as otherwise described
in

* CONFIDENTIAL TREATMENT REQUESTED


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this Section. ABI shall not, without the prior written consent of Redhook,  sell
any Product acquired  hereunder outside the Territory or to any party other than
an  Alliance  Wholesaler.  Redhook  agrees to not sell any  Product to any other
Person in the Territory other than ABI, Affiliated  Wholesalers and Non-Alliance
Wholesalers except at any brew pub situated at a Redhook brewery.  At the option
of ABI and the respective Affiliated  Wholesaler,  any Affiliated Wholesaler may
become an Alliance  Wholesaler,  and Redhook  shall  execute  any  documents  or
instruments reasonably requested by ABI to effectuate this.

                                   ARTICLE III
                          PURCHASE AND SALE OF PRODUCTS


         Redhook  agrees to sell to ABI, and ABI agrees to purchase from Redhook
and re-sell to the Alliance  Wholesalers,  the quantities of Products ordered by
ABI  from  time  to  time  hereunder.  Redhook  acknowledges  that  ABI  is  not
guaranteeing any level of Product sales; and that ABI's  obligations  under this
Agreement  are  limited  to  making  the  Products  available  to  the  Alliance
Wholesalers,  it being understood that Redhook assumes full  responsibility  for
creating demand for the Products. Except for Product shipped directly by Redhook
as set forth in Section 11.07,  (i) all purchases of Product by ABI from Redhook
shall be on an F.O.B. ABI Distribution Facility, freight prepaid basis, and (ii)
Redhook shall ship Products to be delivered to an Alliance Wholesaler to the ABI
Distribution  Facility  designated  from  time to time by ABI for such  Alliance
Wholesaler.

                                   ARTICLE IV
                               PRICING OF PRODUCTS


         4.01 The price for all  Product  sold by  Redhook  to ABI for  Products
shipped to ABI breweries or distribution  centers shall equal: (a) the Scheduled
Price  minus,  as  applicable,  (b) (i) the Staging  Costs,  (ii) the  Cooperage
Handling  Charge,  and/or (iii) Taxes. The price for all Product sold by Redhook
to ABI for Products  shipped to a WSC shall equal (a) the Scheduled Price minus,
as applicable,  (b)(i) the Invoicing Costs,  (ii) the Cooperage  Handling Charge
and/or (iii) Taxes. The price for all Product sold by Redhook to ABI for Product
shipped  directly by Redhook to  Alliance  Wholesalers  shall  equal  (a)(i) the
Scheduled  Price minus,  as  applicable,  (b)(i) the Invoicing  Costs,  (ii) the
Cooperage  Handling  Charge  and/or  (iii)  Taxes.  With respect to any Product,
howsoever  shipped,  the difference  between the respective (a) and (b) shall be
referred to as the "Purchase Price").


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<PAGE>


         Redhook shall  establish the initial  Scheduled  Price for each Product
sold by  Redhook  to ABI.  Redhook  shall have the right at any time in its sole
discretion to modify such Scheduled Price,  such new pricing to become effective
for all  deliveries to ABI not less than 30 days after date of written notice to
ABI of such price modifications.

         4.02 Within 30 days after the end of each calendar  quarter  during the
Term,  ABI shall pay to Redhook  any  Additional  Price  Component  which is due
Redhook with respect to sales of Product by ABI to Alliance  Wholesalers  during
such calendar quarter.

         4.03 Redhook may, from time to time,  suggest  Product resale prices to
ABI, and ABI will consider such suggestions.  However,  ABI shall have the right
to re-sell the Product to Alliance  Wholesalers at such prices and on such terms
and conditions as ABI may, in its sole discretion,  determine from time to time.
Any and all price  promotions to be offered to Alliance  Wholesalers  by Redhook
shall be  implemented  in strict  accordance  with the  procedures  set forth in
ATTACHMENT E attached hereto.

         4.04 ABI shall remit  payment of the Purchase  Price to Redhook for all
Product purchased  hereunder,  contemporaneously  with its receipt of funds from
the Alliance  Wholesalers with respect to such purchases.  ABI shall be entitled
to set off against such payments any amounts owed to ABI for defective  Products
(including  without  limitation,  any  costs  of  disposing  of  such  defective
Product),  or  which  are due ABI from  Redhook  pursuant  to the  terms of this
Agreement or otherwise.  In the event that any Alliance  Wholesaler does not pay
to ABI the  purchase  price  with  respect  to any  Products  purchased  by such
Alliance  Wholesaler  within 60 days after  delivery  thereof,  at the option of
Redhook,  ABI shall assign all of its rights to Redhook  against  such  Alliance
Wholesaler relating to the purchase price for such Products.


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         4.05  Notwithstanding  the  foregoing  provisions  of this  Article IV,
Redhook and ABI recognize  that the laws of certain  States and/or U.S.  federal
laws may preclude the parties from implementing the pricing mechanisms described
above.  Under such  circumstances,  it is the intention of the parties to comply
with the  requirements of such laws,  without such compliance  being a breach of
this Agreement.  Under such  circumstances,  Redhook and ABI shall in good faith
negotiate a periodic adjustment to the Purchase Price, other affected provisions
hereof and the  procedures set forth herein where it is permissible to do so, in
an amount necessary to restore the same economic  benefits Redhook and ABI would
have received had the above pricing  mechanisms  been in effect.  In particular,
the parties agree that  notwithstanding  the other provisions in this Agreement,
in the State of Washington,  AB shall acquire no title to any Product to be sold
and Redhook shall sell Product  directly to  wholesalers  pursuant to agreements
between  such  wholesalers  and  Redhook  at prices and on terms  determined  by
Redhook and such wholesalers.

         4.06 (a) Within 45 days after the end of each calendar quarter, Redhook
shall  deliver  a  report  setting  forth  the  aggregate   volume,  in  case  -
equivalents,  of Product: (i) sold by Redhook in the Territory; and (ii) sold by
Redhook in the Territory during the respective calendar quarter in 2003.

                  (b)  Contemporaneously  with  the  delivery  of  such  report,
Redhook  shall  pay to ABI  the  Margin  for all  Product  sold  by  Redhook  to
Non-Alliance Wholesalers or Affiliated Wholesalers during such calendar quarter.

                  (c) To the  extent  that  during  any  calendar  quarter,  the
quantity of Products  sold in the  Territory by Redhook  exceeds the quantity of
Products (in each case determined on a case equivalent basis) sold by Redhook in
the respective  calendar quarter in 2003 in the Territory,  Redhook shall pay to
ABI the Incremental  Margin for all Product sold by Redhook during such calendar
quarter. Such payment shall be made contemporaneously with the payment set forth
in Section 4.06(b).

                  (d) If during any  calendar  year,  the product of the (i) the
Incremental  Margin and (ii) the amount,  if any, by which the aggregate volume,
in  case-equivalents,  of  Product  sold by  Redhook  in the  Territory  in such
calendar year exceeds the


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<PAGE>

aggregate  volume,  in  case-equivalents  of  Product  sold  by  Redhook  in the
Territory  during  2003 does not  equal the  amounts  paid by  Redhook  for such
calendar year pursuant to Section 4.06(c), then, within 45 days after the end of
such  calendar  year ABI shall pay to Redhook  any amount by which the  payments
previously  made by Redhook  pursuant to Section  4.06(c) exceed such product or
Redhook  shall pay to ABI any amount by which the  payments  previously  made by
Redhook are less than such product.



                  (e) The sales used in computing the Incremental Margin for any
calendar quarter shall be the sales derived from the sales areas included in the
Territory for the calendar  quarter for which the Margin is calculated and those
sales derived from those same sales areas for the respective calendar quarter in
2003.  For purposes of determining  the Margin,  the parties agree that Schedule
4.06 sets forth the Product sold by Redhook in the  Territory  in each  calendar
quarter of 2003 (excluding the State of Washington).  The parties agree that for
purposes of  determining  Incremental  Margin to be paid by Redhook in 2004, the
calculations  set forth in Section 4.06(c) and (d) shall be applied only to that
period  in 2004  (and  the  respective  period  in  2003)  occurring  after  the
Commencement Date.

                  (f) For  purposes  of  Section  4.06,  sales by Redhook in the
State of Washington  shall not affect the  computation  of Margin or Incremental
Margin,  and Redhook is not required to deliver any reports  reflecting sales in
the State of Washington.



         4.07 (a) Within 30 days after the end of each calendar month, ABI shall
notify Redhook of the WSC Fees payable with respect to the Product  delivered by
Redhook for such month,  and also the product  delivered  by Redhook to each WSC
and the fees incurred with respect to each WSC.  Redhook shall pay such WSC Fees
within15 days after its receipt of notification.

         (b)  Within 45 days  after  the end of each  calendar  year,  ABI shall
notify Redhook of the fees charged by each WSC to which Redhook may ship Product
during such calendar year.





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                  (c) In the event ABI changes a WSC or renegotiates the fees to
be paid to a WSC, in either case to which Redhook may be reasonably  expected to
ship Product, ABI shall notify Redhook of such change or renegotiated fees.





                                    ARTICLE V
                      DELIVERY OF PRODUCTS AND RISK OF LOSS


         5.01 Except as set forth in Section 11.07, title to the Product and its
risk of loss or destruction  shall pass from Redhook to ABI upon delivery of the
Product to the ABI  Distribution  Facility  designated by ABI to be used for the
respective Alliance Wholesaler.

         5.02 Redhook  shall insure that Product  shall be packaged,  palletized
and prepared for shipment in accordance  with ABI's  instructions in effect from
time to time for ABI's malt beverage  products.  Redhook shall reimburse ABI for
any costs incurred by ABI in handling Products which are not properly palletized
and/or  prepared  for  shipment,  or which are  palletized  and/or  prepared for
shipment in a manner which causes ABI to incur  handling  expenses not otherwise
included in the  calculation  of Staging Costs as set forth in ATTACHMENT A, and
ABI's  determination of such costs,  absent material error,  shall be binding on
each of ABI and Redhook,  provided,  however,  that such determination  shall be
subject to the audit provisions of Article XVII below.

                                   ARTICLE VI
                              REDHOOK'S TRADEMARKS


         6.01 ABI shall not acquire any right in any of the Redhook  trademarks,
trade dress,  copyrights,  promotional slogans,  trade names,  designs,  labels,
get-ups,  color combinations,  product shapes, and other distinctive features in
the  Products,   or  the  promotional  goods,   advertisements  and  promotional
activities  used  during  the term of this  Agreement  in  conjunction  with the
advertising,  promotion,  distribution,  and sale of


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<PAGE>


the Products (collectively,  "Intellectual Property'). ABI is hereby granted the
right  during  the  Term  to  use  the  Intellectual  Property  in  advertising,
promotion,  distribution, and sale of the Products in the Territory, which right
ABI may sub-license to the Alliance Wholesalers; provided, however, that Redhook
shall  have the right to  require  ABI and the  Alliance  Wholesalers  to submit
representative  samples of any use of such Intellectual  Property to Redhook for
approval,  which  approval shall be deemed given if Redhook does not provide ABI
with written  notice of reasonable  objection  within 10 days of receipt of such
samples. Any and all rights that may be acquired in the Intellectual Property by
the use of the  Intellectual  Property by ABI or any  Alliance  Wholesaler  will
inure to the sole benefit of the owner of the Intellectual Property,  which will
be Redhook.  The foregoing  sentence does not affect ABI's rights in other marks
it may use or adopt. At the request of Redhook,  ABI will execute an instrument,
in a form  agreeable  to  Redhook  and  ABI,  to  effect  further  registration,
maintenance, and renewal of the Intellectual Property, and, where applicable, to
record  Redhook  as a  registered  user of the  Intellectual  Property.  Redhook
represents  and warrants  that it has the right and authority to provide ABI and
the Alliance Wholesalers with the rights provided in this Section.

         6.02 ABI shall promptly notify Redhook of any and all  infringements of
the  Intellectual  Property  pertaining  to the Products  that may come to ABI's
attention  and  shall  assist   Redhook  in  taking  such  action  against  said
infringements as Redhook,  in its sole discretion,  may decide. All expenses and
costs of such legal action, including those of ABI, shall be paid by Redhook.


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<PAGE>


                                   ARTICLE VII
                              TERM AND TERMINATION


         7.01 The term of this Agreement (the "Term") shall become  effective at
the Commencement Date and, unless sooner  terminated  pursuant to the provisions
of this  Agreement,  shall  continue  in effect  until  December  31,  2014 (the
"Initial  Term").  Following  the  Initial  Term,  this  Agreement  shall  renew
automatically  for an  additional  10 year period,  unless ABI provides  written
notice to Redhook on or prior to June 30, 2014 that the  Agreement  shall not be
renewed.

         7.02 Either  party shall have the right at any time to  terminate  this
Agreement immediately, without prejudice to any other legal rights to which such
terminating  party  may  be  entitled,   upon  the  occurrence  and  during  the
continuance of any one or more of the following:

                  (a) material  default by the other party in the performance of
any of the  provisions  of this  Agreement  or any other  agreement  between the
parties, which default is either:

                           (i)      curable  within  30 days,  but is not  cured
                                    within 30 days  following  written notice of
                                    default; or

                           (ii)     not curable within 30 days and either:

                                    (A)     the  defaulting  party fails to take
                                            reasonable  steps to cure as soon as
                                            reasonably     possible    following
                                            written notice of such default; or

                                    (B)     such  default is not cured within 90
                                            days  following  written  notice  of
                                            such default;

                  (b)  default by the other party in the  performance  of any of
the  provisions of this  Agreement or any other  agreement  between the parties,
which default is not described in Section  7.02(a) and which is not cured within
180 days following written notice of such default;


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<PAGE>


                  (c) the  making by the other  party of an  assignment  for the
benefit of creditors; or the commencement by the other party of a voluntary case
or proceeding or the other party's consent to or acquiescence in the entry of an
order for relief against such other party in an  involuntary  case or proceeding
under any bankruptcy, reorganization, insolvency or similar law;

                  (d) the  appointment  of a  trustee  or  receiver  or  similar
officer  of any  court  for the  other  party or for a  substantial  part of the
property of the other  party,  whether  with or without the consent of the other
party,  which is not  terminated  within  60 days  from the date of  appointment
thereof;

                  (e) the institution of bankruptcy, reorganization,  insolvency
or  liquidation   proceedings  by  or  against  the  other  party  without  such
proceedings  being  dismissed  within 90 days  from the date of the  institution
thereof; or

                  (f) Any  representation  or  warranty  made by the other party
hereunder or in the course of performance  of this  Agreement  shall be false in
material respects.

                  (g) The Master  Distributor  Agreement  between  Craft  Brands
Alliance  LLC and ABI dated the date hereof is  terminated  or the  distribution
thereunder of the products of Redhook is terminated pursuant to its terms.

         7.03 ABI shall have the right and option to terminate this Agreement at
any time upon six months' prior written notice to Redhook, in the event:

                           (i) Redhook engages in any Incompatible Conduct which
is not  curable or is not cured to ABI's  satisfaction  (in ABI's sole  opinion)
within 30 days following written notice from ABI to Redhook;

                           (ii) any ABI Competitor or Affiliate thereof acquires
10% or more of the  outstanding  equity  securities in Redhook,  and one or more
officers,  designees  or agents of such Person  becomes a member of the Board of
Directors of Redhook;

                           (iii) The current chief executive  officer of Redhook
ceases to  function  as chief  executive  officer  and within six months of such
cessation a successor  satisfactory in the sole, good faith discretion of ABI is
not appointed; or


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<PAGE>


                           (iv) Redhook shall merge or consolidate  into or with
any other  Person or any other Person  shall merge or  consolidate  into or with
Redhook; or

                           (v)  ABI  or  its  corporate   affiliates  incur  any
liability or expense as a result of any claim asserted against them by or in the
name of  Redhook  or any  shareholder  of  Redhook  as a  result  of the  equity
ownership  of ABI or its  affiliates  in Redhook or any  equity  transaction  or
exchange  between  ABI or its  affiliates  and  Redhook,  and  Redhook  does not
reimburse  and  indemnify  ABI and its  corporate  affiliates  on demand for the
entire amount of such liability and expense.

                                  ARTICLE VIII
                                    REMEDIES


         If either  party  commits a breach or a default of this  Agreement,  no
remedy  herein  conferred  upon or reserved to either  party is exclusive of any
other  available  remedy or  remedies,  but each and every such remedy  shall be
cumulative  and shall be in  addition  to every  other  remedy  given under this
Agreement  or now or  hereafter  existing at law or in equity or by statute.  No
delay or  omission to exercise  any right or power  accruing  upon any breach or
default  shall  impair  any such  right or power or shall be  construed  to be a
waiver thereof,  but any such right and power may be exercised from time to time
and as often as may be deemed expedient.

                                   ARTICLE IX
                                  DUTIES OF ABI

         9.01   Except  as  set  forth  in   Section   11.07,   ABI  shall  have
responsibility  and  authority for  coordinating  delivery of the Product to the
Alliance  Wholesalers.  ABI shall  specify the brand,  package  and  quantity of
Product ordered and shall designate the ABI  Distribution  Facility to which the
Product  shall be shipped  (and ABI may  change  such  designation  from time to
time).  The  costs  charged  to  Redhook  shall  vary  depending  on  which  ABI
Distribution Facility is designated.

         9.02 ABI shall  store all  Product as it stores its own  products,  and
shall  handle all  Product  with the same  degree of care as it handles  its own
products.

                                       14
<PAGE>


         9.03  Except  for  deliveries  made by  Redhook  directly  to  Alliance
Wholesalers  as set forth herein,  ABI shall  promptly and  correctly  fill each
Alliance Wholesaler's order, or shall instruct the WSC to promptly and correctly
fill each Alliance  Wholesaler's order and to load all Products on the trucks or
other means of conveyance to the Alliance Wholesalers.

         9.04 ABI may, in its sole discretion,  add the Products to Exhibit 1 of
the  existing  Wholesaler  Equity  Agreement  that  ABI has  with  any  Alliance
Wholesaler.  At the option of ABI, in the event ABI  acquires  the  distribution
rights to the  Products  in any sales  area,  ABI may direct  Redhook and an ABI
wholesaler  servicing such sales area to enter into a transitional  distribution
agreement  in a form  satisfactory  to ABI in lieu of  adding  the  Products  to
Exhibit 1 of the Wholesaler Equity Agreement between ABI and such wholesaler.

         9.05  ABI  shall  use its  best  efforts  (to the  extent  commercially
reasonable) to maintain all licenses,  permits and other authorizations that are
necessary  for ABI to distribute  the Products in the Territory  where there are
Alliance Wholesalers.

                                    ARTICLE X
                                DUTIES OF REDHOOK

         10.01 Redhook shall have sole  responsibility  for  developing a market
presence,  creating  demand  for  the  Products  in  the  Territory,  generating
marketing  activity  in each  sales area of the  Territory  and  developing  and
distributing promotional programs and promotional literature. As between ABI and
Redhook,  the  parties  understand  that  Redhook  has full  responsibility  and
discretion  with  respect to the  marketing,  advertising  and  promotion of the
Products.  Appropriate  procedures with regard to independent pricing of Product
are set forth in ATTACHMENT E attached hereto.  Promptly upon depletion  reports
on Redhook  inventory  at Alliance  Wholesalers  becoming  available to ABI, ABI
shall provide such information to Redhook.

         10.02 Redhook shall bear risk of loss and transportation  costs for the
Products until delivery of Products to the ABI Distribution  Facility designated
by ABI for such Alliance Wholesaler as set forth in Article V hereof.


                                       15
<PAGE>


         10.03  Redhook  shall,  or shall cause its  Affiliates  to,  secure and
maintain  label  registrations  in all states in the Territory  where Product is
sold.

         10.04 Redhook shall use commercially  reasonable  efforts to market and
promote Product  throughout the Territory in the markets where Products is sold,
with a view  towards  maximizing  sales  of  Products  in  accordance  with  its
marketing and sales plan. In addition, Redhook shall use commercially reasonable
efforts  (to  the  extent   permitted  by  law)  to  prohibit  the  Non-Alliance
Wholesalers  from  knowingly  selling  Products to  retailers in the sales areas
serviced by the Alliance Wholesalers or the Affiliated Wholesalers.

         10.05 As between Redhook and ABI, Redhook shall be responsible for, and
shall  indemnify ABI on an after-tax basis from, all Taxes levied on, against or
in connection with the sale, distribution, possession, marketing or promotion of
the Products in the Territory, except for Taxes levied on ABI's net income.

         10.06 Redhook shall use commercially  reasonable  efforts to obtain and
maintain all licenses,  permits and other  authorizations that are necessary for
Redhook to sell and distribute the Products in the Territory.

                                   ARTICLE XI
                              ADDITIONAL AGREEMENTS


         11.01 Redhook shall at all times maintain its corporate existence,  and
will do or cause to be done all things  necessary  to preserve  and keep in full
force and effect all rights  (charter and  statutory),  licenses and  franchises
necessary for it to perform its obligations hereunder.

         11.02 During the Term of this  Agreement,  Redhook  shall not,  without
ABI's prior written consent, sell, license, transfer, convey, encumber, or place
any restrictions upon, any of the Intellectual Property,  except for licenses of
the Intellectual Property to Affiliated Wholesalers or Non-Alliance  Wholesalers
for  use  solely  in  connection  with  sales  of  Product  by  such  Affiliated
Wholesalers or Non-Alliance Wholesalers.

         11.03  Redhook  represents,  warrants  and  covenants  that  it has the
exclusive  right to market and sell all  products  of Redhook in the  Territory,
whether  such  products  are  currently  existing  or are created in the future.
Except as set forth to the contrary  herein,  during the Term of this Agreement,
ABI will be the exclusive  distributor of Product in the  Territory.  Subject to
the provisions of the following  subsections  of this Section 11.03,  during the
Term of this  Agreement,  Redhook  reserves  the right to add New  Products  for
distribution  in the Territory.  In the event Redhook elects to distribute  such
New  Product in the  Territory,  Redhook  shall first offer to ABI in the manner
described  below,  the right to distribute such New Product and to have such New
Product be deemed a Product for all purposes of this Agreement.


                                       16
<PAGE>


                  (a) If Redhook or any of its Affiliates  desires to distribute
a New Product in the Territory, Redhook shall notify (the "Offer Notice") ABI of
such intention and offer ABI the right to distribute such New Product. Within 10
days of ABI's  receipt  of the Offer  Notice,  ABI shall  advise  Redhook of the
information  required by ABI to make an  evaluation  of such New Product  (which
shall  include,  but may not be limited to, the factors  described on ATTACHMENT
F).  Within  45 days of  ABI's  receipt  of all  such  information  (the  "Offer
Expiration  Date"),  ABI shall advise Redhook of ABI's decision to accept or not
accept such New Product as a Product  under this  Agreement.  If ABI declines to
accept  such New  Product  or fails to  accept  such New  Product  by the  Offer
Expiration Date, Redhook shall be free to otherwise  distribute such New Product
as it deems  appropriate;  provided that Redhook enters into a binding agreement
with another Person for the  distribution of such New Product within 365 days of
the earlier of (Y) ABI's notice not to accept, or (Z) the Offer Expiration Date.
If Redhook does not enter into such binding  agreement  within such time period,
or if Redhook then fails to commence  distribution  under such binding agreement
or interrupts such  distribution  thereafter for 365 consecutive days or more or
decides to terminate its binding  agreement  with such Person,  Redhook shall be
required to comply with the  preceding  provisions  in this section again before
permitting any other Person to distribute the New Product.  If ABI exercises its
option to distribute  the New Product,  such New Product shall be distributed by
ABI in accordance  with the terms and  conditions  set forth in this  Agreement.
Notwithstanding  the above,  Redhook may test market New Products  without ABI's
prior  approval;  provided that: (i) the duration all such test marketing on any
and all New  Products in any single  calendar  year shall not exceed six months;
(ii) the aggregate  volume of all such test  marketing on any single New Product
in any single calendar year shall not exceed one percent of the sales volume for
all  Redhook  Products  for the  preceding  12  months;  and  (iii) all such New
Products  otherwise  comply  with  the  quality  standards  set  forth  in  this
Agreement.

                                       17
<PAGE>


                  (b) For purposes of this Section 11.03,  New Products that are
accepted by ABI are deemed  Products and if Redhook  desires to then modify such
Product, such modifications shall be handled as set forth in Section 11.08.

                  (c) Before making a New Product  available to any Non-Alliance
Wholesaler,  Redhook  shall,  to the extent  allowed by law and permitted by the
terms of any contract  between Redhook and the Non-Alliance  Wholesaler  holding
the relevant  distribution  rights,  first make such New Product  available  for
distribution by ABI. Within 90 days of ABI's receipt of Redhook's notice that it
wishes  such New  Product  distributed  in the sales  area of such  Non-Alliance
Wholesaler,  ABI shall advise Redhook of ABI's  decision to accept  distribution
rights for such New Product in the sales area, in which event the ABI wholesaler
distributing  the  product  in the sales  area  shall be  deemed  an  Affiliated
Wholesaler or an Alliance Wholesaler for such New Product.

         11.04 Redhook shall comply with every  commercially  reasonable request
made by ABI to terminate the distribution rights of any Non-Alliance  Wholesaler
and to cause the Redhook  Products to be  distributed  in the sales area of such
Non-Alliance  Wholesaler  pursuant to this  Agreement.  This  section  shall not
obligate  Redhook to undertake  any action  inconsistent  with  applicable  law,
except  that at the  written  direction  of ABI,  ABI may  obligate  Redhook  to
undertake  an action that may give rise solely to civil  liabilities  to private
parties and any such written  direction  shall  obligate  ABI to  undertake  the
indemnification  obligations with respect to such action as set forth in Section
14.02.

         11.05 If Redhook  wishes to have Products  distributed  in a sales area
where  ABI  is  unable  to  provide  an  Affiliated  Wholesaler  or an  Alliance
Wholesaler  who will agree to carry or fill orders for Products  which have been
procured by Redhook or the  Affiliated  Wholesaler  or the  Alliance  Wholesaler
provided by ABI has refused repeatedly to reasonably  cooperate with Redhook and
has  failed to adhere  to the  provisions  of the



                                       18
<PAGE>

Wholesaler  Equity  Agreement  between  ABI  and  such  Affiliated  or  Alliance
Wholesaler with regard to the Products,  Redhook may, to the extent permitted by
applicable law, terminate the distribution  rights of the Affiliated  Wholesaler
or the Alliance Wholesaler,  select another Person reasonably  acceptable to ABI
and upon  written  terms  and  conditions  consistent  with the  intent  of this
Agreement to make ABI the exclusive distributor of Product in the Territory,  to
distribute the Product in such sales area, and if selected, such Person shall be
deemed a  Non-Alliance  Wholesaler  for purposes of this  Agreement and shall be
added to  ATTACHMENT  D. In the event ABI is able to identify a  wholesaler  for
such  sales area  different  from the  wholesaler  previously  distributing  the
Products  in  such  sales  area,  Redhook's  obligations  with  respect  to  the
Non-Alliance Wholesaler shall be as set forth in Section 11.04.

         11.06 At Redhook's request,  ABI shall instruct Alliance Wholesalers to
return  cooperage to the ABI  Distribution  Facility  designated by ABI, and ABI
shall make  available for pick-up by Redhook all such  cooperage.  Redhook shall
pay ABI the Cooperage  Handling  Charge for all  cooperage  received by ABI. ABI
shall  not be liable  for the costs of any  cooperage  lost or  damaged  by such
Alliance Wholesaler,  and ABI assigns to Redhook all of ABI's rights, if any, to
seek reimbursement  from the Alliance  Wholesaler for lost or damaged cooperage.
Redhook shall reimburse ABI for any costs incurred by ABI in handling  cooperage
that is not properly segregated from other cooperage by the Alliance Wholesalers
or is returned in any other  manner that causes ABI to incur costs not  included
in the calculation of Cooperage  Handling Charges and ABI assigns to Redhook all
of ABI's rights, if any, to seek reimbursement  from those Alliance  Wholesalers
that cause Redhook to incur such additional costs.  ABI's  determination of such
costs,  absent  manifest  error,  shall be binding,  on each of ABI and Redhook;
provided,  however,  that  such  determination  shall be  subject  to the  audit
provisions of Section Article XVII. ABI and Redhook shall develop,  from time to
time,  procedures  for the  collection and redemption of cooperage and cooperage
deposit  fees  satisfactory  to each  party  in its  reasonable  judgment.  Such
procedures shall provide for the prompt delivery of cooperage among ABI, Redhook
and the Alliance  Wholesalers  and the payment and return of  cooperage  deposit
fees promptly upon acceptance and return of the respective cooperage.


                                       19
<PAGE>

         11.07 With the consent of ABI (which ABI may  withdraw or modify at any
time at the option of ABI upon 60 days' advance written  notice),  Redhook shall
be permitted to deliver Product directly to Alliance  Wholesalers.  With respect
to any such delivery,

         (a)       such deliveries  shall still be deemed:  (i) sales by Redhook
                   to ABI, and (ii) re-sales by ABI to such Alliance  Wholesaler
                   for purposes of this Agreement;

         (b)       title to and risk of loss of such Products  shall remain with
                   Redhook until delivery to such Alliance Wholesaler; and

         (c)       Invoicing  Costs shall be  substituted  for Staging Costs for
                   all purposes under this Agreement.

If ABI does not consent to any request by Redhook to deliver Product directly to
an Alliance  Wholesaler,  at the  request of Redhook  from time to time (but not
more often than  annually)  ABI shall review the costs and benefits  incurred or
realized  by Redhook and the  Alliance  Wholesaler  that would  result from such
direct  delivery by Redhook and discuss  such costs and benefits  with  Redhook.
Within 30 days after completion of the review,  ABI shall inform Redhook whether
and to what extent ABI shall consent to Redhook's  requests to deliver  directly
to such Alliance Wholesaler.

         11.08 In order to  modify  an  existing  Product  for the  purposes  of
replacing the Product  (rather than for the purposes of creating a New Product),
Redhook may change, alter, modify or adjust the formula, taste profile,  alcohol
content,  ingredients,  brand name or trade  dress of any  Product (a  "Modified
Product"), if and only if Redhook has given ABI at least 30 days' notice of such
change,  alteration,  modification  or adjustment.  ABI shall have the right and
option,  in its  sole  discretion,  during  such  30  day  period  to  terminate
distribution of such Modified Product under this Agreement,  in which event such
Modified  Product  shall no  longer be deemed a  Product  for  purposes  of this
Agreement.  Prior to execution of this Agreement,  Redhook has delivered to ABI,
in writing,  descriptions  setting forth for each Product the exact  ingredients
(by types and origin) and product  characteristics  for such Product,  including
applicable  tolerances and a description of the primary and secondary  packaging
for each  Product.  Other than  minor  changes in trade  dress,  any  changes or
deviations  in  primary  or  secondary



                                       20
<PAGE>

packaging,  ingredients (additions or deletions),  hops or malt type or supplier
of other key raw material in any Product from that earlier specified by Redhook,
such changes shall cause such Product to be a Modified Product. In addition,  if
ABI's  examination  of any  Product  indicates  a  deviation  greater  than  the
tolerance  previously  indicated  for such Product in three or more tests,  such
Product shall be deemed to be a Modified Product.

         11.09 Redhook shall ship to ABI at 220 Taste Room, One Busch Place, St.
Louis, Missouri 63118, Attention: Director - Brewing Education (or to such other
address or  location as may be  specified  from time to time in writing by ABI):
(a) one (1) case of each packaged Product during each calendar quarter;  and (b)
from  time to time  upon  request  by ABI,  one (1) keg of the  draught  Product
specified by AB.

         11.10 ABI shall maintain in its employ a corporate inventory management
employee   (the   "Inventory   Manager"),   a   substantial   portion   of   the
responsibilities  of whom shall be to  coordinate  and  administer  logistics of
Product  distribution to Alliance  Wholesalers.  Within fifteen (15) days of the
end of each calendar quarter during the Term, beginning with the second calendar
quarter of 2004,  Redhook shall pay to ABI 8.75% of the annual Inventory Manager
Fee. ABI shall pay the Inventory  Manager cash  compensation  not exceeding that
generally paid to other ABI employees with similar experience,  training,  skill
level and performance.  Annually,  ABI and Redhook will review the time spent by
the  Inventory  Manager with respect to the products sold by Redhook as compared
to the time spent on other matters for the preceding  year, and annually ABI and
Redhook shall adjust the percentage  specified in this paragraph so that Redhook
pays to ABI an amount that reasonably  compensates ABI for the time spent by the
Inventory  Manager in the preceding year on matters relating to products sold by
Redhook.

         11.11 Upon written  agreement by the parties hereto,  the Territory may
be reduced to exclude states or portions of the United States of America.

         11.12  Redhook  shall not  acquire  any  alcohol  or  non-alcohol  malt
beverage  brand or the assets or equity  securities  of any  producer of alcohol
malt beverages  unless Redhook  delivers to ABI a written plan providing for the
exclusive  distribution  of such malt beverages by ABI that is  satisfactory  to
ABI.


                                       21
<PAGE>


                                   ARTICLE XII
              REPRESENTATIONS, WARRANTIES AND COVENANTS OF REDHOOK


         Redhook represents, warrants and covenants to ABI as follows:

         12.01 Redhook is a corporation duly organized,  validly existing and in
good standing under the laws of the State of  Washington,  has full corporate or
other  power and  authority  to carry on its  business as now  conducted  and as
currently  proposed to be conducted,  and to execute,  deliver and carry out the
terms of this Agreement,  has all permits and authorizations  necessary to carry
on its business as presently  conducted,  and is, or shall be if required,  duly
qualified  to do  business  as a foreign  corporation  in good  standing in each
jurisdiction  wherein the nature of  Redhook's  business and  operations  or the
character  of the  properties  owned or held under  lease by Redhook  makes such
qualification  necessary  and in which the  failure to so  qualify  would have a
materially  adverse  effect on the business,  prospects,  profits,  condition or
operations, financial or otherwise, of Redhook.

         12.02  This  Agreement  and  all  related   documents  have  been  duly
authorized,  executed and delivered by Redhook and constitute  legal,  valid and
binding  agreements  or  obligations  of  Redhook   enforceable  against  it  in
accordance with their terms, subject to applicable bankruptcy,  insolvency,  and
similar laws affecting the enforcement of creditors' rights  generally.  Neither
the execution and delivery nor the performance by Redhook of this Agreement will
contravene any law or governmental rule or regulation, or any judgment or order,
applicable to or binding on Redhook,  or Redhook's charter documents,  or result
in any breach of or constitute any default  under,  or result in the creation of
any lien upon any property of Redhook under,  any  indenture,  mortgage or other
agreement or  instrument  to which  Redhook is a party or by which it, or any of
its properties may be bound or affected.

         12.03 Neither the execution and delivery nor the performance by Redhook
of this  Agreement  requires  any  consent or  approval  of,  giving  notice to,
registration  with,  or taking of any other action in respect of, any federal or
state governmental  authority or agency which has not been obtained prior to the
date hereof.



                                       22
<PAGE>

         12.04 ABI's purchase or resale of Products or other goods  hereunder in
the form furnished to ABI by Redhook and ABI's use of the Intellectual  Property
in  accordance  with the  terms of  authorization  by the  Redhook  of ABI's use
pursuant to the this  Agreement  shall not infringe  any valid United  States or
foreign patent right, right of privacy or publicity,  or any rights with respect
to  trademarks,  trade  dress,  copyrights,  promotional  slogans,  trade names,
designs,   labels,  get-ups,  color  combinations,   product  shapes,  or  other
trademarks rights.

         12.05 Except as set forth in ATTACHMENT  D,  Redhook,  has no contract,
agreement or  understanding,  whether  oral or written,  with any Person for the
distribution of Product in the Territory.

         12.06 As of the date hereof,  the list of Non-Alliance  Wholesalers set
forth in ATTACHMENT D is accurate, full and complete.

         12.07    All Products:

                  (a) shall be merchantable and fit for their intended purpose;

                  (b) shall be produced exclusively in the breweries of Redhook,
Widmer or in other breweries approved by ABI;

                  (c) shall be free from  defects in materials  and  workmanship
and in compliance with applicable federal and state laws and regulations;

                  (d) shall be delivered free from any lawful security interest,
lien or other encumbrance;

                  (e) shall not be adulterated or misbranded  within the meaning
of the Federal Food,  Drug and Cosmetic  Act, as amended,  and shall comply with
the applicable provisions of the Code of Federal Regulations; and

                  (f) shall be produced in compliance  with the  requirements of
the Fair Labor Standards Act of 1938, as amended,  and Executive Order No. 11246
and of the rules,  regulations and relevant orders of the Secretary of Labor, if
applicable.


                                       23
<PAGE>


         12.08 (a) In order to ensure the  freshness  quality  of  Product  when
consumed  by the  public,  all  Products  shall be  delivered  by Redhook to the
designated ABI Distribution Facility, or to the Alliance Wholesalers, Affiliated
Wholesalers and Non-Alliance Wholesalers:  (i) for packaged Product, at least 80
days; and (ii) for draft Product,  at least 32 days, prior to the time when such
Product  would no longer be salable to or  consumable  by the  public,  based on
criteria developed by Redhook and reasonably acceptable to ABI, by which Redhook
judges the freshness of its malt and non-malt beverage products.

                  (b) If ABI  changes  from  time to  time  its  standards  with
respect to the remaining shelf life as applied generally to its products sold in
the United  States,  Redhook agrees that within six months of the effective date
of such change,  Redhook shall conform its shipment practices to the current ABI
standard.

                  (c) To the  extent any  Product  is shipped to a WSC,  ABI may
change the  standards  described  in  Section  12.08(a)  to provide  assurances,
satisfactory  in the reasonable  judgment of ABI, that the Product will continue
to be delivered to retailers with an remaining  shelf life  consistent  with the
standards generally used by ABI

         12.09  Redhook shall comply in material  respects  with all  applicable
governmental  laws,  regulations  and  orders  covering  the  production,  sale,
packaging, marketing and delivering of the Products.

                                  ARTICLE XIII
                REPRESENTATIONS, WARRANTIES AND COVENANTS OF ABI

         ABI represents, warrants and covenants to Redhook as follows:

         13.01 ABI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Missouri,  has full corporate  power and
authority to carry on its business as now conducted and as currently proposed to
be conducted,  and to execute, deliver and carry out the terms of this Agreement
and has all permits and  authorizations  necessary  to carry on its  business as
presently conducted.

         13.02  This  Agreement  and  all  related   documents  have  been  duly
authorized,  executed  and  delivered  by ABI and  constitute  legal,  valid and
binding  agreements or


                                       24
<PAGE>


obligations  of ABI  enforceable  against it in  accordance  with  their  terms,
subject to applicable  bankruptcy,  insolvency,  and similar laws  affecting the
enforcement of creditors' rights  generally.  Neither the execution and delivery
nor  the  performance  by ABI of  this  Agreement  will  contravene  any  law or
governmental  rule or  regulation,  or any judgment or order,  applicable  to or
binding  on ABI,  or ABI's  charter  documents,  or result  in any  breach of or
constitute  any default  under,  or result in the  creation of any lien upon any
property of ABI under, any indenture,  mortgage or other agreement or instrument
to which ABI is a party or by which it, or any of its properties may be bound or
affected.

         13.03 Neither the execution and delivery nor the  performance by ABI of
this  Agreement   requires  any  consent  or  approval  of,  giving  notice  to,
registration  with,  or taking of any other action in respect of, any federal or
state governmental authority or agency, which has not been obtained prior to the
date hereof.

         13.04 ABI shall comply in material respects with all governmental laws,
regulations and orders covering the re-sale and distribution of the Products.

                                   ARTICLE XIV
                                 INDEMNIFICATION


         14.01 In addition to any other indemnities set forth in this Agreement,
Redhook  will  indemnify,  protect,  defend and hold  harmless  each of ABI, its
Affiliates,  wholesalers  and  each of  their  respective  directors,  officers,
employees and agents, from and against all claims, liabilities, losses, damages,
injuries, demands, actions, causes of action, suits, proceedings,  judgments and
expenses, including, without limitation, reasonable attorneys' fees, court costs
and other legal expenses  arising from,  connected with or attributable  to: (a)
the Products;  (b) the breach by Redhook of any provision hereof;  (c) ABI's use
of the  Intellectual  Property in conjunction  with the distribution and sale of
the Products in  accordance  with the terms  hereof;  (d) the  inaccuracy of any
warranty or representation made by Redhook herein or in connection herewith;  or
(e) the termination of the distribution  rights of any Affiliated  Wholesaler or
Alliance  Wholesaler  pursuant to Section 11.05.  None of the above  indemnities
shall  require  Redhook  to  indemnify,  protect,  defend or hold  harmless  any
indemnitee  with respect to any claim to the extent such claim  arises from,  is
connected with or is  attributable  to the  negligence or willful  misconduct of
such ABI  Indemnitee.  Expiration or  termination  of this  Agreement  shall not
affect the continuing obligations of Redhook to indemnify ABI under this Section
14.01.


                                       25
<PAGE>


         14.02 In addition to other indemnities set forth in this Agreement, ABI
will  indemnify,  protect,  defend  and  hold  harmless  each  of  Redhook,  its
Affiliates  and each of their  respective  directors,  officers,  employees  and
agents, from and against all claims,  liabilities,  losses,  damages,  injuries,
demands, actions, causes of action, suits, proceedings,  judgments and expenses,
including, without limitation, reasonable attorneys' fees, court costs and other
legal expenses  arising from,  connected with or attributable to: (a) the breach
by  ABI of  any  provision  hereof;  (b)  the  inaccuracy  of  any  warranty  or
representation made by ABI herein or in connection  herewith;  or (c) any action
taken by Redhook at the written  direction  of ABI  pursuant  to Section  11.04.
Expiration or  termination  of this  Agreement  shall not affect the  continuing
obligations of ABI to indemnify Redhook under this Section 14.02. Nothing herein
shall require ABI to indemnify,  protect, defend or hold harmless any indemnitee
with  respect to any claim to the extent such claim  arises  from,  is connected
with  or is  attributable  to the  negligence  or  willful  misconduct  of  such
indemnitee or the actions of any Non-Alliance Wholesalers.

         14.03 If a claim by a third party is made  against a party  indemnified
pursuant to this  Article  XIV, and if such  indemnified  party  intends to seek
indemnity  with respect  thereto under this Article XIV, the  indemnified  party
shall  promptly (and in any case within 30 days of such claim being made) notify
the indemnifying party of such claim; provided, however, that any failure of the
indemnified party to promptly notify the indemnifying  party of such claim shall
not relieve the indemnifying  party of its obligations  pursuant to this Section
14.03 except to the extent that the indemnifying  party would be responsible for
the payment of any additional amounts or be actually prejudiced in any other way
as a result of such failure.  The  indemnifying  party shall have the right (but
not the  obligation) to undertake,  conduct and control,  through counsel of its
own choosing and at the indemnifying  party's expense, the settlement or defense
thereof,  provided the indemnifying party proceeds in good faith,  expeditiously
and diligently.  If the indemnifying party does not notify the indemnified party
in writing that it will defend any matter  within 20 business days after receipt
of notice from the indemnified  party of


                                       26
<PAGE>


the existence of such matter,  or if the indemnifying  party disputes that it is
liable to the indemnified  party for any sum pursuant to this Section 14.03, the
indemnifying  party  shall  have  no  right  to  defend  such  matter,  and  the
indemnified  party shall have full right and power to defend or  otherwise  deal
with  and  dispose  of the  matter  and  shall be  indemnified  for the fees and
expenses of counsel  retained  for such  purpose.  The  indemnified  party shall
cooperate  with the  indemnifying  party in  connection  with any defense by the
indemnifying  party of a claim,  but the  indemnifying  party  shall  permit the
indemnified  party to participate in such  settlement or defense through counsel
chosen by the indemnified  party and the fees and expenses of such counsel shall
be borne by the  indemnified  party.  Without the prior  written  consent of the
indemnified  party, the indemnifying party will not enter into any settlement of
any such claim which would lead to  liability  or create any  financial or other
obligation on the part of the  indemnified  party,  and the  indemnifying  party
shall  after  any  such  settlement  or the  resolution  of any  claim  promptly
reimburse the  indemnified  party for the full amount of any loss resulting from
such claim not theretofore paid by the indemnifying party. The indemnified party
will not enter into any  settlement  or pay (except  pursuant to a judgment) any
such claim without the prior written consent of the  indemnifying  party,  which
consent  shall not  unreasonably  be withheld or  delayed.  Notwithstanding  the
foregoing,  the indemnified party shall have the right to pay or settle any such
claim, in the event the indemnified party has not assumed or is not pursuing the
defense  of  any  claim  or is in  breach  of  its  indemnification  obligations
hereunder.  The indemnification  required by this Section 14.03 shall be made by
periodic  payments of the amount  thereof as losses are incurred and as and when
bills are received.


                                       27
<PAGE>


                                   ARTICLE XV
                                    INSURANCE

         Redhook shall procure and maintain from qualified and licensed insurers
with Best's Ratings of at least A-: (i) a  comprehensive  or commercial  general
liability  insurance  policy  with at least  $10,000,000  in  coverage  for each
occurrence, including liquor liability; (ii) a worker's compensation policy with
at least  $2,000,000  in  coverage  for each  occurrence;  and (iii) a  property
insurance policy covering damage to the Product owned by Redhook. Coverage shall
be on an occurrence  rather than a claims made basis.  The policy shall name ABI
as  an   additional   insured  and  shall   include   coverage   for   Redhook's
indemnification  obligations under this Agreement. The policy shall provide that
ABI will be notified of the  cancellation  or any  restrictive  amendment of the
policy at least 15 days  prior to the  effective  date of such  cancellation  or
amendment.  Redhook shall not violate, or permit to be violated,  any conditions
of  such  insurance  policies,  and  Redhook  shall  at all  times  satisfy  the
requirements of the insurance carrier writing said policy.
         From time to time at the request of ABI, Redhook shall provide ABI with
a certificate  from such insurer  certifying that the insurance policy described
in this  section is in force and the  evidence  of coverage  shall  specifically
state that  coverage as it pertains  to ABI shall be primary  regardless  of any
other coverage that may be available to ABI. Failure to procure and maintain the
insurance  coverage  specified  herein shall be deemed a material breach of this
Agreement

                                   ARTICLE XVI
                                  FORCE MAJEURE


         16.01 If by reason of Force Majeure  either party is unable in whole or
in part to carry out any of its agreements  contained  herein,  such party shall
not be deemed in default  during the  continuance  of such  inability.  The term
"Force Majeure" as used herein shall mean,  without  limitation,  the following:
acts of God; strikes, lockouts or other industrial disturbances;  acts of public
enemies;  orders or  restraints  of any kind from any  government  of the United
States of America or from a state or from any of their departments,  agencies or
officials (except when such  governmental  action results from


                                       28
<PAGE>


a  party's  failure  or  refusal  to comply  with any  applicable  law,  rule or
regulation),  or of any  civil  or  military  authority;  insurrections;  riots;
landslides;  earthquakes;  fires; storms; droughts,  floods, explosions; and any
other  cause or event  not  reasonably  within  the  control  of the  respective
parties. Each party agrees,  however, to remedy with all reasonable dispatch the
cause or causes preventing it from carrying out the Agreement, provided that the
settlement of strikes,  lockouts and other course is in its judgment unfavorable
to it.

         16.02 The response to an act of Force Majeure resulting from industrial
disturbance  shall be entirely within the discretion of the affected party,  and
the affected party shall not be required to make settlement of strikes, lockouts
and other  industrial  disturbances  by acceding to the demands of the  opposing
party or parties.

                                  ARTICLE XVII
                           AUDIT AND INSPECTION RIGHTS

                  (a)  During  the Term and for a period  of at least  two years
following the  termination  of this  Agreement,  each party shall  maintain such
books  and  records  (collectively,  "Records")  in  accordance  with  generally
accepted  accounting  principles   consistently  applied  as  are  necessary  to
substantiate that:
                           (i) All invoices and other  charges  submitted to the
                  other for payment hereunder were valid and proper;

                           (ii)  No  payments   have  been  made,   directly  or
                  indirectly,  by or on  behalf  of  either  party to or for the
                  benefit of any  employee  or agent of the other  party who may
                  reasonably  be  expected  to  influence   such  other  party's
                  decision  to enter  into this  Agreement,  or the amount to be
                  paid by such other  party  pursuant  hereto  (as used  herein,
                  "payment"  shall include money,  property,  services,  and all
                  other forms of consideration); and

                           (iii) Such party has  conformed to the  provisions of
                  this Agreement.

                  (b) Each party and/or its representative  shall have the right
at any time during normal  business hours,  upon five business days' notice,  to
have  PricewaterhouseCoopers  LLP,  or  such  other  internationally  recognized
accounting  firm as agreed to by the parties audit the Records of the other in a
manner  which does not create  unreasonable  disruption  to the audited  party's
normal conduct of business.


                                       29
<PAGE>

                                  ARTICLE XVIII
                                 CONFIDENTIALITY

         18.01 (a) During and  subsequent  to the Term of this  Agreement,  each
party shall treat and shall cause its respective employees, officers, directors,
advisors, representatives, subsidiaries, Affiliates, assigns, subcontractors and
any and all persons or business  entities  acting  under one or any of them,  to
treat, as  confidential  property and not disclose to any other Person or use in
any manner, except as is necessary to perform this Agreement,  (and then only on
a confidential  basis satisfactory to both parties),  any information  regarding
the  other  party's  prices,  plans,  programs,   processes,   products,  costs,
equipment,  operations or customers  (including without  limitation  information
received by ABI with respect to Product  formula and ingredient and  information
by Redhook received  regarding the  distribution and logistics  programs used by
ABI)  ("Confidential  Information")  which may come within the knowledge of such
party, its officers, employees or advisors in the performance of this Agreement,
without in each instance  securing the prior written consent of the other party;
nor shall ABI use such Confidential  Information to produce a beer whose formula
duplicates any of the Product formulas.

                  (b)  Nothing  above,  however,  shall  prevent  either  ABI or
Redhook from disclosing to any other Person or using in any manner,  information
that such party can show:

                           (i) has  been  published  or has  become  part of the
                   public domain without any breach of this Agreement other than
                   by acts, omissions or fault of such party or its employees or
                   agents;

                           (ii) has been  furnished  or has been  made  known to
                   such party by third parties (other than those acting directly
                   or indirectly for or on behalf of the disclosing  party) as a
                   matter of legal right without restrictions on its disclosure;

                           (iii) was in such party's lawful  possession prior to
                   the disclosure thereof by the other party;

                                       30

<PAGE>

                           (iv)  is  later   independently   developed   by  the
                   receiving party; or

                           (v) has been  required to be disclosed by law,  court
                   order, or government order or regulation.

         (c) If any party is required by law, court order or government order or
regulation to disclose Confidential Information, such party shall provide notice
thereof to the other party and undertake  reasonable  steps to provide the other
party with an opportunity to object to such disclosure.

         (d) Except as required by law, neither party shall release, or cause or
allow the release of,  information to the  communications  media or to any other
third party  concerning the specific terms of this Agreement or any amendment or
modification  thereto  without  the prior  written  consent of the other  party;
provided,  however,  that if in the reasonable opinion of the disclosing party's
counsel,  the failure to disclose any such information would create a reasonable
risk of  non-compliance  with applicable  securities  laws, then such disclosing
party may so disclose such information provided it gives the other party as much
advance notice as is reasonably possible.

         18.02 Neither party shall make any Confidential  Information  available
to anyone  other than those of its  respective  employees  and advisors who need
such Confidential Information to enable them to perform this Agreement.

         18.03  These  secrecy  obligations  with  respect  to the  Confidential
Information shall survive the termination or expiration of this Agreement.

                                   ARTICLE XIX
                                   ASSIGNMENT

         19.01  This  Agreement  will be  binding  upon,  and will  inure to the
benefit of, the parties  hereto and their  respective  successors  and permitted
assigns.

         19.02 Redhook may not assign this  Agreement to any Person  without the
prior written consent of ABI.

                                       31
<PAGE>


         19.03 Provided that such assignment does not deny Redhook the practical
benefits  of this  Agreement,  ABI  may  assign  this  Agreement  to any  entity
controlled by  Anheuser-Busch  Companies,  Inc., or to any entity which succeeds
through any transaction to the business of ABI  substantially as a whole, but no
such  assignment  shall  release  ABI from its  obligations  as primary  obligor
hereunder without Redhook's prior written consent, and ABI shall retain the sole
right to provide any consents or waivers under this Agreement.

                                   ARTICLE XX
                                     NOTICES

                  All  notices  required  or  permitted  hereunder  shall  be in
writing and shall be deemed duly given if either personally  delivered,  sent by
electronic  facsimile or sent by overnight  courier  service or certified  mail,
return receipt requested, addressed to the parties as follows:

If to ABI:                 Anheuser-Busch, Incorporated
                           One Busch Place
                           St. Louis, Missouri 63118
                           Attn:    Vice President - Business and
                                    Wholesaler System Development
                           Telephone:  (314) 577-9766
                           Facsimile Number:  (314)765 -9167

If to Redhook:             Redhook Ale Brewery, Incorporated
                           14300 NE  145th Street, Suite 210
                           Woodinville, Washington  98072-9045
                           Attn: Chief Executive Officer
                           Facsimile Number:(425) 485-0761

or to such other  address,  facsimile  number or attention as either party shall
provide to the other in accordance  herewith.  Notices  delivered in person,  by
overnight  courier or by facsimile  shall be effective  when  received.  Notices
given by  certified  mail shall be  effective  on the third  business  day after
mailing  unless  sooner  received,  in which case they shall be  effective  upon
receipt.


                                       32
<PAGE>


                                   ARTICLE XXI
                             INDEPENDENT CONTRACTORS

         The parties shall be and act as  independent  contractors  and under no
circumstances   shall  this   Agreement  be  construed  to  create  any  agency,
partnership,  joint  venture or  employment  relationship  between the  parties.
Neither  party has any  authority  to bind the other in any way except as may be
otherwise expressly stated in this Agreement.  The parties recognize that during
the  period of this  Agreement,  there will be  employees  of one party upon the
premises of the other.  It is understood  and agreed that on such  occasions the
employees of each party shall remain the  employees  of that party  solely,  and
that each party shall be solely  responsible  for the wages and benefits for its
employees,  and that any injury which may be  sustained by an employee  shall be
covered  under the worker's  compensation  insurance of the party by which he is
employed.

                                  ARTICLE XXII
                                  MISCELLANEOUS

         22.01  In  exercising  their  respective  rights  (including,   without
limitation, the making of any determinations under this Agreement, discretionary
or otherwise) and performing their respective obligations hereunder, each of the
parties shall act in good faith and in a commercially  reasonable manner; except
that with respect to (a) the  determination of Incompatible  Conduct or the cure
thereof by ABI,  (b) ABI's  decision  to  terminate  distribution  of a Modified
Product (as described in Section 11.08 above),  (c) ABI's judgment made pursuant
to Section  7.03(i) or  determination  made pursuant to Section  7.03(iii);  ABI
shall only be required  to act in good faith and need not act in a  commercially
reasonable manner.

         22.02 If any  provision of this  Agreement  shall be  determined  to be
illegal and  unenforceable by any court of law or any competent  governmental or
other authority,  the remaining provisions shall be severable and enforceable in
accordance  with their  terms so long as this  Agreement  without  such terms or
provisions does not fail in its essential  commercial  purpose or purposes.  The
parties   will   negotiate  in  good  faith  to  replace  any  such  illegal  or
unenforceable  provision or provisions with suitable substitute  provisions that
will maintain the economic purposes and intentions of this Agreement.


                                       33
<PAGE>


         22.03  Failure by either party to insist on strict  performance  by the
other of any term, condition or obligation set forth in this Agreement shall not
be  deemed a waiver  of the same or any  similar  breach,  and no  waiver of any
provision hereof shall be effective unless in writing,  specifying the provision
to be waived.

         22.04 This  Agreement is entered into in the State of Missouri and will
be governed by and construed  under the laws of Missouri,  including the Uniform
Commercial  Code as in effect in the State.  The parties agree that any legal or
equitable  action or proceeding  with respect to this Agreement shall be brought
in the United States District Court for the Eastern  District of Missouri (or if
such court does not have jurisdiction,  in any court of general  jurisdiction in
the County of St. Louis,  Missouri) or in the United States  District  Court for
the Western District of Washington (or if such court does not have jurisdiction,
in any court of general jurisdiction in Washington).

         22.05 This  Agreement  constitutes  the entire  agreement  between  the
parties with respect to the subject  matter hereof and  supersedes  all prior or
contemporaneous  agreements in regard thereto.  This Agreement cannot be altered
or  modified   except  by  an   agreement  in  writing   signed  by   authorized
representatives  of both parties and  specifically  referring to this Agreement.
The  section  headings  are  inserted  for  convenience  only  and are in no way
intended to define or limit the scope, extent or intent of any provision of this
Agreement.

         22.06  Nothing in this  Agreement,  express or implied,  is intended or
shall be construed to give any Person other than the parties to this  Agreement,
and the indemnitees  specified in Article XIV or their respective  successors or
assigns any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained herein.

         22.07 This  Agreement may be executed in one or more  counterparts  and
shall be the valid and binding agreement of the parties when the counterparts of
this Agreement have been duly executed and delivered by each party hereto.

                                       34
<PAGE>


         22.08  Redhook  acknowledges  that  ABI  is  reviewing  changes  to the
procedures by which Affiliated Wholesalers and Alliance Wholesalers generate and
transmit orders for Products.  ABI may request from Redhook reimbursement of out
of pocket costs incurred to analyze or implement such change,  and Redhook shall
reasonably consider such requests. Redhook and ABI acknowledge that implementing
such  changes may require an  amendment  hereto and each party shall  reasonably
consider such amendment.



                            (SIGNATURE PAGE FOLLOWS)



                                       35
<PAGE>






         IN WITNESS WHEREOF, this Agreement is executed on behalf of the parties
by their duly  authorized  representatives  as of the day and year  first  above
written.


ANHEUSER-BUSCH, INCORPORATED                   REDHOOK ALE BREWERY,
                                               INCORPORATED


By:/s/ JAMES F. HOFFMEISTER                    By: /s/ PAUL SHIPMAN
  ------------------------------------------       ----------------------------
       James F. Hoffmeister                            Paul Shipman
       Vice President - Administration                 Chief Executive Officer
                                                       and President



<PAGE>


                                  ATTACHMENT A

             STAGING COSTS AND COOPERAGE HANDLING COST MODIFICATION

For each  calendar  year during the Term,  the Staging  Costs and the  Cooperage
Handling Costs shall each be recalculated each January to be an amount equal to:

                                        *

where:

*       =   the Staging Costs or the Cooperage Handling Costs, as applicable, in
            effect for the prior calendar year

*       =   the  percentage  change (in  decimal  fraction  form) in the Average
            Budgeted  Hourly  Fully  Loaded  Labor Rate for beer  packaging  and
            shipping  laborers,  budgeted  for the  calendar  year for which the
            calculation  is made,  as  compared  to the  amount  which  had been
            budgeted for the prior calendar year.

The Average Budgeted Hourly Fully Loaded Labor Rate for each calendar year shall
be  determined  by taking the  arithmetic  average of the Budgeted  Hourly Fully
Loaded  Labor Rates for the subject  year (as set forth in the annual  budget in
the CMS/SAP  system) in effect on December 31 preceding the subject year for all
ABI breweries in the Territory.

         EXAMPLE:
2004 Package Staging Cost           *

Budgeted Avg. Fully Loaded Labor
Rate

2004                                *
2005                                *
    % change                        *
2005 Package Staging Cost           *

2004 Cooperage Handling Cost        *

Budgeted Avg. Fully Loaded Labor Rate

2004                                *
2005                                *
     % change                       *

2005 Cooperage Handling Cost        *

*CONFIDENTIAL TREATMENT REQUESTED


<PAGE>



                                  ATTACHMENT B

                              INCOMPATIBLE CONDUCT



A. Examples of activities that constitute Incompatible Conduct:

(1) Advertising by Redhook directed at underage drinkers;

(2) Production  by Redhook of a high alcohol  beer;  provided  that high alcohol
    beer shall not include  production of a beer whose alcohol  content does not
    exceed the alcohol  content of (a) a similar Product  currently  distributed
    hereunder or (b) a product that is made or distributed currently by ABI;

(3) Advertising by Redhook based upon the high alcohol content of its beer;

(4) Statements by Redhook defaming ABI or its products;

(5) Criminal activities by Redhook or its senior executives; and

(6) Quality and  wholesomeness  of Product is materially  affected,  taking into
    account the permitted tolerances and Product specifications.

B. Examples of activities that do not constitute Incompatible Conduct:

(1) Poor operating results by Redhook;

(2) Poor performance of Redhook or unsuccessful product introduction by Redhook;

(3) Introduction by Redhook of products directly competitive with ABI products;

(4) Any  activity  the sole effect of which on ABI is to  decrease  the value of
    ABI's  investment  in Redhook or the value of ABI's  distribution  rights of
    Redhook products; and

(5) Isolated, non-repetitive, inadvertent minor regulatory infractions.



<PAGE>



                                                                     PAGE 1 0F 2
                                  ATTACHMENT C

                       METHODOLOGY TO ANNUALLY MODIFY THE
                          INCREMENTAL MARGIN, MARGIN,
                             AND THE INVOICING COSTS

For each calendar year during the Term, the Incremental  Margin,  Margin and the
Invoicing  Costs  shall  each  be  recalculated  (rounding  to the  nearest  one
one-hundredth of a cent) each January to be an amount equal to:

                                                       *
where:

*   =   the Incremental Margin, Margin or the Invoicing Costs, as applicable, in
        effect for the prior calendar year

*   =   the forecasted  annual rate of change (in per cent) in the "GDP Deflator
        (Implicit)"  for the subject  calendar  year, as published by DRI/McGraw
        Hill  division  of  Standard  &  Poor's  Corporation  in the  "Inflation
        Summary"  table in the October issue in the preceding  year of REVIEW OF
        THE  U.S.  ECONOMY  (or  such  other  index  or  publication  as  may be
        reasonably acceptable to Redhook and ABI if such index or publication is
        no longer published).

EXAMPLE:
Assume the October 2004 issue of REVIEW OF THE U.S. ECONOMY, shows the Inflation
Summary table as follows:
                                                    Years
                                         -----------------------------
                                         2001     2002     2003   2004
                                         -----------------------------
GDP Deflator (Implicit) ................  1.6     1.7      2.1     2.0

The 2005 Base Margin would be calculated by multiplying the 2004 Base Margin

*

The  2005  Incremental  Margin  would  be  calculated  by  multiplying  the 2004
Incremental Margin

*


* CONFIDENTIAL TREATMENT REQUESTED


                                                                     PAGE 2 OF 2



The 2005 Invoicing  Costs would be calculated by multiplying  the 2004 Invoicing
Costs (* per Pallet Lift) by *

*





* CONFIDENTIAL TREATMENT REQUESTED

                                       2

<PAGE>



                                  ATTACHMENT D

                            NON-ALLIANCE WHOLESALERS


         Redhook has no Non-Alliance Wholesalers




<PAGE>



                                  ATTACHMENT E
                     PROCEDURES RELATING TO PRICING MATTERS

         1.  *

         2.  *

         3.  *

         4.  *

         5.  *.






* CONFIDENTIAL TREATMENT REQUESTED



<PAGE>



                                  ATTACHMENT F
                     FACTORS NEEDED TO EVALUATE NEW PRODUCTS

Redhook must provide at least the following  information to ABI in order for ABI
to make an evaluation of New Product:

1.  Proposed Name of New Product

2.  Proposed New Product Packages

3.  Proposed New Product Label

4.  Proposed Ingredients and Proposed Suppliers

5.  Alcohol Content

6.  Beginning Gravity

7.  IBU

8.  Comprehensive Marketing Plan 9. Consumer Research

<PAGE>